Crisis contracts: How to make the bankers pay

Hans Gersbach, 2 April 2011When banks failed, the government paid up. But the bankers responsible kept their bonuses from the years of excess. This column argues for “crisis contracts”. Such contracts require that, in the event of a crisis, bank managers forfeit a portion of their past earnings to rescue the banking system. Full Article: Crisis contracts: How to make the bankers pay

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If you have cash in a US bank, you can expect to have the federal government take it all the next time US banks find themselves in trouble.
The days of the federal government stealing money from taxpayers, or borrowing it from the Federal Reserve, to save troubled banks — as in they did in the 2008 crisis — may be over. Congress is considering imitating the theft in Cyprus and letting troubled banks “bail-in” depositor money in order to make themselves solvent.

In his most recent letter to shareholders Warren Buffett suggests that bank CEOs and board members be held accountable when the risks they take (and reward themselves obscenely for when they payoff) backfire:

Just days before the UK's Barclays bank is set to unveil the number of staff who earned more than GBP1 million last year in its annual report, as part of a push for more transparency, the FT reports that a provisional EU deal - set to go into place in January 2014, will bring the most severe pay crackdown since the 2008 crisis began.

Banks continue to pay our politicians well to make sure they continue doling out special favors to the large banks. It is up to you, and your neighbors whether you hold politicians accountable for the actions they took to create the climate for the credit crisis and the huge favors granted (with your money) by politicians to those investment bankers. The bankers count on their money buying the politicians.